ECONOMIC FORUM LUNCHEON - tamuk.edu

TEXAS A&M UNIVERSITY-KINGSVILLE COLLEGE OF BUSINESS ADMINISTRATION

ECONOMIC LUNCHEON&FORUM

Kleberg

Kleberg

Kleberg County Compared to the Two TexasCounties with the Next Larger Populations

Looking towards OurEconomic Future:

Tuesday, November 1, 2016, 11:30 a.m. - 1 p.m.Memorial Student Union Building • Ballrooms A&B

Sponsored by Kleberg Bank

Welcome by Dr. Thomas Krueger, J.R. Manning Professor of Innovation in Business Education and

Chair, Department of Accounting and Finance, Texas A&M-Kingsville ..............11:50 a.m. - 11:55 a.m.

Welcome and video from Mr. Joe Henkel, President and CEO, Kleberg Bank

Comments on video from Mr. Everett Roy, Mortgage Sales Manager .............. 11:55 a.m. - 12:05 p.m.

“Kingsville Retail: Now and in the Future”

by Aaron Farmer, Senior Vice President, The Retail Coach ..................................... 12:05 - 12:35 p.m.

“Looking towards our Economic Future: Kleberg County Compared to the Texas Counties with the

Two Next Larger Populations” by Dr. Thomas Krueger............................................. 12:35 - 12:50 p.m.

Question & Answer Session....................................................................................... 12:50 - 12:55 p.m.

Concluding Remarks by Dr. Krueger ................................................................................ 12:55 - 1 p.m.


Aaron FarmerSenior Vice President, The Retail Coach“Kingsville Retail: Now and in the Future”Aaron Farmer is Senior Vice President of The Retail Coach, a national consult-ing firm and pioneer of the retail recruitment industry. During the past 15 years, The Retail Coach has helped more than 250 cities throughout the U.S. expand their sales tax base and enhance the quality of life by identifying and actively recruiting retailers and developers to each client community. The consulting firm also uses its research and strategies to help existing retailers and restau-rants in a client community improve their merchandising and marketing.

Aaron joined The Retail Coach in 2008 and has been instrumental in launching

Dr. Thomas KruegerChair of Department of Accounting and Finance and J.R. ManningEndowed Professor of Innovation in Business Education, Texas A&MUniversity-Kingsville College of Business Administration

Thomas Krueger is Chair of the Department of Accounting and Finance and the J.R. Manning Endowed Professor of Innovation in Business Education at Texas A&M-Kingsville. He holds a B.S. from the University of Wisconsin-Eau Claire, MBA from Minnesota State University and DBA in finance from the

University of Kentucky. Before joining Texas A&M-Kingsville, he taught finance at the University of North Carolina at Charlotte (1986-1989) and the University of Wisconsin-La Crosse (1989-2010). Since joining Texas A&M-Kingsville in 2011, Dr. Krueger has taught a variety of undergraduate and graduate courses. Some of the classes taught over the past year include business finance, investments, financial planning and capital budgeting, financial ranch management and financial management & sustainability. In October, 2016, Dr. Krueger was elected to the 24-person board directing graduate education policy in the State of Texas, as a member of the Texas Higher Education Coordinating Board’s Graduate Education Advisory Committee.

Dr. Krueger has authored over 90 refereed journal articles and has been cited 692 times in other articles. GoogleScholar reported that his H-statistic is 11, which means that at least 11 authored articles have been cited 11 or more times. Perhaps his most widely-read article, titled, “Super Bowl Stock Market Predictor,” was published in the top-tier Journal of Finance. Other research has resulted in winning three “Best in Track” Awards and two “Distinguished Research” Awards at national finance meetings, as well as being chosen for the 2015 “Teaching Excellence Award,” an acknowledgement as the best instructor in the finance discipline by the Academy of Finance, an international association of finance professionals. In 2014, 2015, and 2016, Dr. Krueger was recipient of CBA’s Distinguished Research of the Year awards.

The Presenters

“Looking towards our Economic Future: Kleberg County Comparedto the Texas Counties with the Two Next Larger Populations”

new company services and innovations, including the use of license plate surveys to capture a clear picture of the sources of a community’s consumers. He has also driven the implementation of new technology such as interactive mapping to provide the information sought by site selectors and developers.

Aaron holds a degree in marketing from The Mays Business School at Texas A&M University and an MBA from Texas A&M University-Commerce. Prior to joining The Retail Coach, Aaron was employed in marketing research and retail development where he worked on projects for some of America’s leading retailers and restaurants including FedEx, Kinkos, Sally Beauty Supply, Adidas, Concentra and the National American Association of Subway Franchises (NAASF).

Statement of Purpose

The 2016 Economic Forum booklet provides comprehensive documentation concerning regional economic indicators for Kleberg County, Texas. The research is part of ongoing analysis provided by Texas A&M University-Kingsville’s College of Business Administration. Part I presents a broad range of demographic data, including education and poverty levels. Part II focuses on economic conditions, including the employment, payroll, and number of business establishments in Kleberg County. Part III presents opinions of local business managers, residents and students regarding key economic factors, including anticipated standards of living. The report builds on the base of economic information first provided in 2012 and is expected to annually expand our understanding of Kleberg County and thereby give decision-makers a valuable tool for strategic planning.

Kleberg Bank, under the direction of Mr. Joe Henkel, sponsors this research in collaboration with the Texas A&M-Kingsville College of Business Administration, which is led by Dean Natalya Delcoure. I want to thank Ms. Julie Navejar, Ms. Mary Alice Wiechman and Mr. Jason Marton from the Texas A&M-Kingsville Office of Marketing and Communications for proofreading and putting this report in its final form as well as the PowerPoint presenta-tion. Mr. Harmeet Singh, lecturer in the College of Business Administration, did the final proofreading.

This year’s Economic Forum survey improved on prior surveys in three ways. One, the survey was simplified. Two, the number of surveys collected was more than doubled from the maximum in prior years. Three, surveys were collected in multiple locations in Kingsville. The author wishes to thank his Graduate Assistant, Mr. Jerome Brooks for conducting the surveys, and Mr. Nick Harrel, Mr. Joe Henkel, and Mr. Manny Salazar for allowing us to conduct the survey at Harrel’s Pharmacy’s restaurant, Kleberg Bank’s lobby, and the October meeting of the Kingsville Economic Development Council, respectively.

Specific goals of the project include: • Assist business owners by supplying key indicators of local economic vitality. • Identify trends in order to put the current economic condition in perspective. • Contrast Kleberg County to other relevant regions in order to enhance our understanding. • Develop specific economic measures that are not readily available. • Act as a storehouse of these economic fundamental and trend insights. • Develop and refine tools to assess Kleberg County’s economic condition. • Bring academic, business and government professionals together for discussion about the local economy and related critical issues. • Create a business recruitment and retention tool by publishing this information.

The 2016 ForumIn 2012, the College of Business Administration hosted its first Economic Forum. Across the years, Kleberg County’s economic condition has been studied in reference to adjacent counties (Spring 2012), data across a 40-year time span (Spring 2013), and counties with similar populations (Spring 2014), the impact of the Eagle Ford Shale formation (Fall 2014), and counties with similar populations at branch campuses of The Texas A&M Univer-sity System (2015).

Recent economic developments in Kleberg County, such as the building of La Quinta hotel on Highway 77 and planned opening of Hobby Lobby on 14th Street, speak well of Kleberg County’s economic potential. In January, 2016, the Kingsville Economic Development Council contracted with Retail Coach, Inc. to assist in the marketing of Kingsville to retail, manufacturing, and other concerns. Over the past 16 years, Retail Coach has worked with over 400 cities attempting to lure new businesses and thereby become better places to work and live. We are fortunate to have Mr. Aaron Farmer, Senior Vice President of Retail Coach, with us this year to shed light on potential retail development in this region.

Figure 1. County Population Figure 2. 2015 Residents Per Square Mile and their Median Age Figure 3. 2015 County Ethnicity Figure 4. Education Expenditures

Figure 5. 2014 Educational Attainment Figure 6. 2014 Poverty Levels Figure 7. 2014 Monetary Income Figure 8. Housing Costs and Living Conditions Figure 9. Unemployment Rates Figure 10. Job Growth and Projected Annual Job Growth Prospects Figure 11. Most Common Industries by Employment Figure 12. Most Common Industries by Payroll Figure 13. Most Common Industries by Establishments Figure 14. Key Agricultural Industry Statistics Figure 15. 2015 Retail Sales, Property Values and County Taxes Figure 16. Annual Percentage Change in Sales Tax Allocation Figure 17. Major Political Party Affiliation Relative to United States Average

Figure 18. Survey Respondents’ Perceptions Regarding Health of the U.S. Economy Figure 19. Survey Respondents’ Perceptions Regarding Health of the Kleberg County Economy Figure 20. Survey Respondents’ Perceptions Regarding Personal Financial Health Figure 21. Survey Respondents’ Perceptions Regarding Business Support within Kleberg County Figure 22. Survey Respondents’ Perceptions Regarding Business Support by Local Government Figure 23. Survey Respondents’ Perceptions Regarding Business Support by Texas A&M-Kingsville Figure 24. Top Five Economic Concerns of Survey Respondents Figure 25. Preferred Government Allocation of $100 in Additional Revenue

Part I. Demographic Aspects

Part III. Economic Survey

Part II. Economic Conditions

ContentsTable of

TitusCounty

Area: 426 mi²Founded: 1846Population: 32,487 (2015)County seat: Mount PleasantUniversity: Northeast Texas Community CollegeCities: Mount Pleasant, Winfield, Talco, Miller's CoveLargest private employer: Pilgrim’s Pride

Titus County

Area: 899 mi²Founded: 1837Population: 33,693 (2015)County seat: BonhamCities: Bonham, Honey Grove, Leonard, LadoniaUniversity: NoneLargest private employer: McCraw Oil

FanninCounty

Counties Being Compared to Kleberg County

FanninCounty

County PopulationThis report is the sixth analysis of Economic Conditions in Kleberg County. Beyond raw numbers, a variety of benchmarks have been used in the evaluation. Benchmarking can be done across time or in comparison to similar entities. Prior Economic Forum comparisons have been relative to adjacent counties, those between Kleberg County and the Eagle Ford Shale formation, and counties with similar-size Texas A&M University System student bodies. This is the second time benchmarking was done on the basis of population. The prior analysis limited itself to counties in the Coastal Bend, resulting in benchmarks of Aransas County and Bee County, the former having a population that was only 74 percent that of Kleberg County.

This year the geographic qualifier has been widened to consider any Texas county as a relevant benchmark. Furthermore, thinking in terms of growth, the benchmarks chosen are the two Texas counties with the next larger populations. As shown in the first column of Figure 1, at the end of 2015, Kleberg County had 31,857 residents. Titus County, which is 257 miles north of Houston, had 32,487 residents. Fannin County, which is 71 miles north of Dallas, had a population of 33,693. The county seats of Titus and Fannin Counties are 91 miles apart, separated by three other Texas counties.

Although their current populations are similar, population growth is on different trajectories, as illustrated by the change in population from 2000 to 2015. In fact, Kleberg County had the highest population in 2010. Scanning across the first two sets of bars in Figure 1, Kleberg County’s population remained fairly stagnant, growing only 1.0 percent over the intervening 15 years. Conversely, Titus County’s population grew by 15.5 percent, while Fannin County grew about half as fast at 7.9 percent.

Demographic Aspects

County Population40,00035,000

25,00020,00015,00010,000

5,000

Kleberg

County Seat

31,549

2000

31,242

28,118

31,857

2015

33,693

32,487

26,213

15,564

10,127

Titus

Fannin

0

30,000

Source: U.S. Bureau of Census; http://Quickfacts.census.gov/qfd/index.html

Figure 1

Kleberg County’s population is much more centralized, with 26,213 residents living in Kingsville, which is exhibited using the right set of bars in Figure 1. By comparison, a lower number of residents live in the largest city in Titus County (Mount Pleasant) and Fannin County (Bonham) combined. In the process of accommodating King Ranch Inc.® and other large estates, only 17.7 percent of Kleberg County residents live outside of Kingsville. In the other two counties, over half of the residents live outside their county seats. Kleberg County’s 890 square miles is just one short or is 99 percent as large as Fannin County’s 891 square miles. Titus County, by comparison, is less than half as big at 406 square miles. However, considering the concentration of Kleberg County residents in Kingsville’s 14 square miles, challenges facing Kleberg County may be more akin to those surfacing in Titus County.

Although its 36 residents per square mile put it below any other jurisdiction reported in Figure 2, the 1,848 residents per square mile in Kingsville may not have the same perception of Kleberg County being a rural area. With its similar size and slightly larger population, Fannin County has two more residents per square mile. Due to its much smaller size, Titus County is much more urban. Although Texas is viewed as a wide- open, natural, and unsettled state, its large cities put Texas at the top in terms of residents per square mile.

One consequence of the concentration of Kleberg County is its limited amount of transportation infrastruc-ture. Kleberg County has only 151 centerline miles, according to the Texas Department of Transportation, which is only 67 percent of the centerline miles found in Titus and 31 percent of those in the similarly-sized Fannin County. The 373 total miles of road in Kleberg County are only 65 percent and 38 percent of the miles in the other two counties, respectively. This difference is not expected to diminish any time soon, because the Texas Comptroller of Public Accounts reported that, excluding the U.S. 77 upgrade, in 2015, $1,516 was spent per mile of centerline road in Kleberg County. By comparison, the expenditure in Titus County and Fanning County was $11,012 and $4,877, respectively.

Overall, Kleberg County has the youngest residents. As shown in the right side of Figure 2, the median age of residents in Kleberg County is 27.9, or six years less than Titus County, and 14.1 years less than Fannin County. Kleberg County’s residents are younger than the Texas and U.S. populations, while Fannin County is older. This difference results in significantly different strains on educational resources, which will be evaluat-ed later.

36

3834

3336

28

102

020406080

100120

4280

84

2015 Residents Per SquareMile and their Median Age

Source: Texas Association of Counties, http://www.txcip.org/tac/census/profile.php?FIPS=48273

Kleberg County

Residents Median Age

Titus County

Fannin County

Texas

United States

Figure 2

Ethnicity and EducationWide differences in terms of ethnicity exist across the political jurisdiction under consideration. As displayed in Figure 3, the percent of the population that is Hispanic in Kleberg County exceeds the percentages in Titus County and Fannin County, combined. Meanwhile, the percentage of the white population in Fannin County exceeds the sum of the percentage of the population that is white in Kleberg County and Titus County, combined. Although Titus has relatively more black residents, the percentages are higher in Texas overall and higher still in the United States. There is relatively little race diversity beyond the three major ethnic groups when compared to the other counties.

Connecting Figure 2’s median age data and Figure 3’s ethnic data, a 2015 study by the highly-regarded Pew Research group reports that the Hispanic population is the only ethnic group wherein over half of all mothers between the age of 40 and 44 had over two children. The Hispanic concentration in Kleberg County results in a higher educational cost, despite the lower population. As shown in Figure 4, $11,200 is spent per student, about half of which goes towards direct instruction. Although Titus County spends less per student, $5,700 is for direct instruction. It consequently has a lower student/teacher ratio. Fannin County has the highest student/teacher ratio, slightly exceeding the national average. With both a high expenditure per student and high student/teacher ratio, it appears as though teaching salaries are higher outside the state of Texas. Kleberg County’s low instructional expenditure and low student/teacher ratio suggest a lower teacher salary on the local level. In light of the higher proportion of its residents that are under 18, education costs are a significantly greater burden in Kleberg County.

The lower amount spent on education per student may be having a negative consequence in terms of high school graduation rates, which is illustrated by the blue bars in Figure 5. Seventy-four percent of Kleberg County residents have earned a high school diploma. Although higher than Titus County’s high school graduation rate, Kleberg County trails the state and nation by six percent and 13 percent, respectively. Assuming that approximately half of Kleberg County’s population is over 25 (remember, from Figure 2 that the median population is 28 years), in the typical statewide population there are 946 more high school graduates.

0%10%20%30%40%50%60%70%80%90%

Kleberg 71.7% 21.6%

41.5% 46.8%

44.0%

62.6%

3.5% 3.2%

5.2%

3.4%2.3%9.4%

12.4%

13.2%

6.7%

7.1%

79.4%10.5%

38.4%

17.1%

Hispanic White Black Other

Titus

Fannin

Texas

United States

2015 County Ethnicity

Source: U.S. Bureau of Census; http://Quickfacts.census.gov/qfd/index.html

Figure 3

The presence of Texas A&M University-Kingsville is probably a key factor contributing to Kleberg County’s college graduation rate far exceeding the rates in the comparison counties. While almost one in four Kleberg County residents above 25 has a college degree, the ratio in Titus County is only one in seven. Only the U.S. rate, of 30 percent of the population having a college degree far surpasses that of Kleberg County.

Poverty and HousingComparison of Figure 5 and Figure 6 reveals the link between lower graduation rates and poverty levels. The two counties with the lower high school graduation rates also have the highest poverty rates. An estimat-ed 22.8 percent of Kingsville residents live in poverty. Although the official poverty rate in the United States is 14.8 percent, social services organizations place it about half of one percent higher. Nonetheless, the difference of about eight percent equates to 2,550 residents in a population of Kleberg County’s size.

Although Kleberg County’s percentage of children in poverty is the highest presented in the second set of figures in Figure 6, it is only 5.7 percent (i.e., 28.5 – 22.8) higher than the overall poverty rate. By compari-son, the U.S. poverty rate by some accounts is 8.9 percent higher (i.e., 24.2% - 15.3%). The difference may be due to the presence of a learned class which historically has had smaller households. Buttressing this argument is the 9.1 percent growth in the poverty rate as one focuses on children in Titus County.

$18$16$14$12$10$8$6$4$2$0

$11.2 $5.5

$5.7

$5.7

$5.2

$6.4

$10.1

$10.8

$12.4

12.9

12.5

15.4

15.3

13.2

$09.8

Total ExpendituresPer Student

(In Thousands)

InstructionalExpendituresPer Student

(In Thousands)

Student/TeacherRatio

Kleberg County

Titus County

Fannin County

Texas

United States

Education Expenditures

Source: National Center for Education Statistics, as reported in Sperling’s Best Places to Live, http://www.bestplaces.net/.

Figure 4

Economic Conditions

Poverty is reflected in the monetary income statistics, where an interesting dichotomy occurs across Kleberg County’s two primary measures. Per capita income is calculated by taking the total income of a county and dividing it by the number of residents. Given the similar population sizes, we would expect all three counties under consideration to have similar “per capita” value. In reality, as illustrated with the red bars in Figure 7, Kleberg County’s per capita income is 9.6 percent above that of Titus County, 25.9 percent above the Texas average, and 18.2 percent above the U.S. average. In additional to having a substantial aggregate income, Kleberg County has a limited population base across which the aggregate is distributed.

The other popular income statistic is median household income. If incomes are evenly distributed across individuals, or in a similar fashion as that found in the benchmark population, the data would provide similar inferences. As shown with the blue bars in Figure 7, on the median household income dimension, Titus County catches up to Kleberg County. Median incomes in Kleberg County are only 94.6 percent, 77.1 percent, and 76.2 percent of that found in Fannin County, Texas overall, and the United States, respectively. The gulf between the rich and the poor is wider in Kleberg County than in most other areas. Before going on, it should be noted that the cost of living in Kleberg County is only 80 percent of the national average, but as was reported at the 2015 Economic Forum, most of this difference is tied to housing costs. The advantage is obtained when initially moving to Kleberg County from other regions with pricier homes. Beyond housing, most other costs are similar to the national average. For instance, the cost of medical care in Kleberg County is 98 percent of the national average.

100%

74% 73% 82% 80% 87%

24% 26% 30%14% 16%

KlebergCounty

TitusCounty

FanninCounty Texas United

States

High School Diploma

High School Diploma

Bachelor’s Degree

Bachelor’s Degree

80%60%40%20%0%

Educational Attainment

Source: U.S. Census Bureau, 2014 American Community Survey, https://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml

Figure 5Percent of Population over 25 Years Old

5.0%0.0%

25.0%

15.0%20.0%

10.0%

30.0%35.0%

22.8% 28.5%

29.7%

22.7%

24.3%

24.2%

20.6%

21.1%

17.1%

17.7%

14.8%

15.3%

Kleberg County

Residents in Poverty

Per

cent

age

Children in Poverty

Titus County

Fannin County

Texas

United States(Official)

United States(Feeding America)

2014 Poverty Levels

Source: http://spotlightonpoverty.org/states/texas/ http://www.feedingamerica.org/hunger-in-america/

Kleberg County

Titus County

Fannin County

Texas

United States

Per capita money income

Median household income

$0 $10,000 $20,000

Texas

$27,125

$53,035

Fannin County

$33,958$43,211

Titus County

$31,171

$40,680

KlebergCounty

$34,148$40,884

United States

$28,889

$53,657

$30,000 $40,000 $50,000 $60,000

Per capita money income Median household income

2014 Monetary Income

Source: Bureau of Economic Analysis, www.bea.gov.

Figure 6

Figure 7

In order to underscore the difference in housing costs, a variety of relevant measures are presented in Figure 8. The median home price in Kleberg County is $74,000, which is presented by the bar in the first set of bars. This amount is 78 percent, 85 percent, and 54 percent of median housing costs in Titus County, Fannin County, and Texas overall.

Regardless of housing costs, approximately the same numbers of residents live in homes in the identified areas. With 54 persons per 20 homes (or 2.7 persons per residence), Kleberg County’s reported resident density is about midway between that of Titus County and Fannin County. Across the state, the average density of residents per household is 2.8. The lower local housing costs are not due to having fewer people per residence.

There has been a nationwide argument about various reasons for the marriage rate to be in decline. Without making any statement about the reasons, we see in the right set of bars that 44.3 percent of the marriage-able population is married in Kleberg County. This percentage is lower than that found in the other counties, or Texas overall. In Texas, 53.2 percent of marriageable population is currently engaged. After adjusting for Census Bureau’s estimate that 24.5 percent of local residents are under 18, applying the difference in marriage rates equates to 2,141 [31,857 (1-0.245) (0.532-0.443)] fewer married local individuals than found in the average population of a similar size across Texas.

Unemployment and Job Growth RatesAs illustrated by the blue line in Figure 9, Kleberg County’s unemployment rate has almost returned to its recent high of 8.0 percent, where it stood in 2011. After dropping to 5.4 percent in 2014, the mid-year rate this year has ballooned to 7.7 percent. On a base of about 24,052 residents above 17 years old [31,857 (1-0.245)], the difference amounts to about 553 residents now being out of work and receiving federal government benefits versus only 18 months earlier. Titus County has experienced a similar U-shaped trend, dropping from 8.2% to 5.4%, before rising to 6.9 percent. Not all counties have experienced the same reversal of fortunes, as exemplified by Fannin County, whose 8.3 percent rate in 2011 is the highest listed unemployment rate included in Figure 9. As of mid-year 2016, Fannin County’s unemployment rate was less than half as high at 4.0 percent and, more importantly, has continued to fall! Texas overall has experienced a recent increase in unemployment rates.

Kleberg County

Median Home Price($ In Thousands)

Reported ResidentsPer 20 Households

Reported Married

Titus County

Fannin County

Texas

020406080

100120140160

$74.0

50

56

54 44.3

44.4

52.5

53.2

59

$87.5

$138.0

$94.3

Housing Costs and Living ConditionsFigure 8

Source: National Center for Health Statistics, http://www.cdc.gov/nchs/fastats/marriage-divorce.htm

5.0%4.0%3.0%2.0%1.0%0.0%

-1.0%-2.0%

2.6% 4.2%

4.0%

3.3%

3.6%

3.9%2.5%

2.6%

1.2%

-0.9%

2015 2016-2025Kleberg County

Titus County

Fannin County

Texas

United States

Job Growth and Projected AnnualJob Growth Prospects

9%8%7%6%5%4%3%2%1%

8.0%

2011

Une

mpl

oym

ent R

ate

2012 2013 2014 2015 2016

8.2%

8.3%

7.4%

7.5% 7.4%

7.7%

7.1%

6.9%

6.5%

6.4% 6.0%

6.9%6.3%

5.3%

4.6%

6.9%

5.6%

5.4%

5.8%

4.2% 4.0%

4.5%4.2%

0%

Kleberg

Titus

Fannin

Texas

Unemployment Rate2011 - 2015 Year-end, 2016 Mid-year

Source: Bureau of Labor Statistics; http://www.bls.gov/lau/laucntycur14.txt

Figure 9

Figure 10

Although unemployment statistics paint a negative picture of economic conditions in Kleberg County, a positive outlook is portrayed by the number of jobs. Unemployment and employment numbers are not perfectly, negatively correlated due to a variety of confounding factors including migration, aging, numbers seeking unemployment compensation, and the number of residents seeking employment. Another factor is that part-time jobs may be rising, which may not actually increase employment. Or stated another way, one person may hold two (or more) part-time jobs. Some people believe that the Affordable Care Act has shifted many jobs from full-time to part-time.

As seen in Figure 10, Kleberg County’s job growth rate in 2015 was 2.6 percent. This rate matched Texas overall, which was twice the national job growth rate. By comparison, the number of jobs in Titus County declined by 0.9 percent. As important as these statistics are, the other key issue concerns expectations regarding employment opportunities. As shown on the right side of Figure 10, over the 2016-2025 decade, Kleberg County is expected to add 4.2 percent more jobs annually. This rate exceeds Texas’ overall job growth forecast of 4.0 percent per year. Third on the list is Fannin County which at 3.9 percent exceeds the overall Unites States forecast of 3.6 percent more jobs annually. Underscoring the vitality of the Texas economy, Titus County is not too far behind with 3.3 percent.

Employment OpportunitiesThe next three figures provide insight to Kleberg County private sector employment opportunities in terms of number of positions, employee wages, and the number of establishments. As shown on the first row of Figure 11, an equal 21.8 percent of local employment opportunities are in health care/social services and retail trade. Accommodations and food services account for another 18.8 percent of local jobs. About one-third of all Titus County jobs are in the manufacturing sector, due to its tractor-trailer manufacturing firms and poultry farms. Relatively large portions of local jobs in Fannin County and Texas overall are in the construction industry. Finance and insurance account for one in every 20 jobs statewide.

The disparity of income across industries is exemplified by variation in the height of the bars in Figure 11 and Figure 12, the latter of which reports payroll as a percentage of local, private-sector employment. The transportation industry joins the list of industries reported, because it represents 13.4 percent of local salaries, despite being less than five percent of jobs in any studied county or Texas overall. At the other extreme, accommodation and fast food drops from 18.8 percent of jobs (Figure 11) to only 8.2 percent of total private-sector, Kleberg County payrolls (Figure 12). The other two largest employment opportunities in Kleberg County also diminish when considering their contribution to Kleberg County’s private-sector payroll. Although 21.8 of Kleberg jobs are in the health care/social services industry, employees earn a lower but comparable 19.9 percent of all wages. A steeper drop-off occurs in the retail trade sector, which has 21.8 percent of jobs but only 17.1 percent of income.

The relative importance of the accommodations and food services industries to Kleberg County can be seen by looking at this sector’s contribution to the total private sector payroll across political jurisdictions. The 8.2 percent reported in the first cell of Figure 12 is more than the combined percentages of Titus County and Fannin County. Despite the low wages, accommodations- and food service-based payroll in Kleberg County is 4.9 percent higher than the national average. Kleberg County also has over eight percent more income coming from employment in the health care/social services sector and almost nine percent more retail-based payroll than comes in this sector state wide. Ironically, these differences are likely to increase over the next year as Hobby Lobby and La Quinta begin operation in Kingsville. The importance of accommodations and retail to the Kingsville economy may be one of the factors luring these companies to open up outlets locally. The largest single sector in which Kleberg County falls behind is in manufacturing, where the Texas average is over seven percent higher, and over 30 percent behind Titus County.

Another way to evaluate Kleberg County’s business acumen is through the sheer number of establishments. This information is shown in Figure 13, which now includes “other services” as a sector with over five percent of the local economy being represented. The “other services” sector includes vehicle repair (found along all of Corral Street as well as Sixth Street on the south side of town), personal care services (i.e., nail salons), and dry cleaning services (i.e., Don’s). Stated another way, one of every 7.8 (i.e., 1 ÷ 0.128) establishments in Kleberg County is in the accommodations and food services sector. By comparison, the next higher jurisdiction is the one in 10 found in Titus County. Despite its low employment and payroll, Kleberg County has an abnormally high number of finance sector establishments, which is undoubtedly a consequence of the relative high number of payday loan firms in Kingsville. The impact of the Kingsville Walmart can be seen in that the number of retail trade establishments listed on Figure 13 is similar to that of the other counties, though having a larger employment percentage and payroll percentage. The similarity of the “other services” sector across counties highlights the fact that a base level of vehicle repair, haircuts, and cleaning is needed across regions. Another example of the impact of a few large tractor-trailer and poultry operations is Titus County’s manufacturing numbers which are below that of Fannin County, despite far outdistancing both Kleberg and Fannin in terms of employment and payroll.

40%

35%

25%

20%

15%

10%

18.8%

8.4%

10.4%

10.8%

1.8%

21.8%

15.6%

14.2%

18.8%14.4%25.5%

33.9%

21.8%

5%

5.0%

5.0%

6.0%

6.1% 8.1%

4.3%

3.1%

3.1%

1.7%

12.9%

12.5%

0%Accommo-dation and

FoodServices

ConstructionManufac-

turing Retail TradeFinance &Insurance

Health Careand SocialAssistance

30%

Kleberg County

Titus County

Fannin County

Texas

Most Common Industriesby EmploymentEmployment, at Least 5% in One County

Figure 11

Source: Bureau of Labor Statistics, http://www.bls.gov/regions/southwest/news-release/countyemploymentandwages_texas.htm

Property ValuationAlthough not five percent of employment, payroll, or establishments, Kleberg County is known for King Ranch and other cattle operations within its borders. So, let’s take a look at the agricultural industry. As illustrated by the blue bar in the left set in Figure 14, USDA is reporting that 34,000 head of cattle were grazing in Kleberg County earlier this year. There are about 2,000 more cattle than residents, and unlike people, there could be a surge in cattle numbers right after calving season. Titus County has 9,000 fewer cattle. Perhaps most surprising is that Fannin County has over twice as many cattle. Reasons for the differ-ence include the lingering impact of the recent drought, additional acreage needed to support a single cow in the relatively arid Kleberg County, and that King Ranch cattle are located in many counties.

The aggregate value of the ranching operations in Kleberg County comes in at $61.8 million. Poultry, beef cattle, and timber industries all contribute to Titus County’s much larger aggregate agricultural value. A plurality of Fannin County’s agricultural property value is in cattle ranching, with wheat production being the second most common agricultural activity. Given the limited acreage available net of King Ranch and other large cattle operations, plus the need for more land per head, it is not surprising that the pasture rental costs in Kleberg County are higher than those found elsewhere.

40%

35%

25%

20%

15%

10%

8.2%

3.3%

3.5%

3.3%

2.7%

19.9%

14.3%

11.2%

15.1%16.4%30.7%

32.7%

17.1% 13.4%

1.3%

1.8%

4.5%

5%

6.3%

8.7%

7.6%

6.1% 9.9%

5.5%

4.3%

3.6%

2.3%

9.9%

6.3%


FoodServices


turing Retail TradeTrans-

portationFinance &Insurance


30%

Kleberg County

Titus County

Fannin County

Texas

Most Common Industriesby PayrollPayroll at Least 5% in One County

Figure 12


Given the importance of retail trade in Kleberg County to resident employment and payroll, additional consid-eration is also given to this aspect of local economic performance. Annual retail sales in Kleberg County last year came in at $496.5 million, as shown in the first cell of Figure 15. This equates to $15,737 per person, or about half of per capita income. Taxes, savings, donations, and money spent elsewhere (i.e., Corpus Christi) account for most of the difference. Titus County has just over $100 million more in retail sales. Meanwhile, the impact of having Dallas nearby by is likely a contributing factor in Fannin County’s retail sales trailing those in Kleberg County by $173 million. Relatively low housing cost in Kleberg County result in low aggre-gate property values, which are shown in the middle of Figure 15. The difference between property values in Kleberg County and Fannin County of $761 million amounts to $23,887 per resident. Obviously, the impor-tance of bringing good new employers from both an income and property valuation perspective is evident. Higher local property taxes are also a consequence of lower property values, despite needing to deliver similar services. Kleberg County property tax levies are 71 percent higher than those in Titus County, and 37 percent higher than they are in Fannin County. Also working against Kleberg County from the tax perspec-tive is the fact that it is the only one of these counties with a university, which while indirectly creating homes and businesses, is itself exempt from property taxes.

25%

20%

15%

10%

12.8%

9.9%

8.7%

9.1%

7.2%

12.6%

13.3%

11.5%

18.4%6.7%11.0%

5.7%

18.6% 11.8%

11.0%

11.8%

8.9%

5%

4.9%

7.1%

8.5%

7.3% 3.5%

10.4%

7.6%

7.8%

2.6%

19.9%

14.3%


FoodServices


turing Retail TradeTrans-

portationFinance &Insurance


Kleberg County

Titus County

Fannin County

Texas

Most Common Industriesby EstablishmentsEstablishments at Least 5% in One County

Figure 13


In addition to property taxes, a significant source of county revenue is the re-allocation of sales tax receipts. As shown as the blue line in Figure 16, sales tax receipts in 2016 are well behind those of 2015. In fact, Kleberg County sales tax allocations rose in only one (i.e., 2014) of the past four years. By comparison, Titus County’s tax receipts fell in only one year and Fannin County’s tax receipts were higher in each year. For every dollar received in 2012, Kleberg County is on a pace to receive only 81 cents in 2016. Meanwhile, per reallocated dollar received in 2012, Titus County and Fannin County are on a pace to receive $1.19 cents and $1.24, respectively, in 2016. The ability of energy industry firms to put off fleet vehicle purchases until oil prices recover is very evident. Please note that these are aggregate numbers, and that the city of Kingsville is not trailing past years to the extent being experienced by Kleberg County.

Finally, given that this Economic Forum is being held only one week before the 2016 Presidential election, it seemed worthwhile to share a little bit of information about Kleberg County’s voting constituency. In Kleberg County, Democratic candidates garnered 53.3 percent of votes in state-wide and national elections over the 1988 - 2014 period. This is 2.2 percent higher than the national average of 51.1 percent, as illustrated in Figure 17. At 45.6 percent, local Republican voter orientation is 1.6 percent below the national average for 47.2 percent. The benchmark counties, and Texas overall, have a much more Republican leaning.

010203040506070

9080

2016 Cattle(In Thousands)

34.0 $61.8$81.2$71.1

$75$65$65

25.575.0

2015 AggregateAgriculture Value

($ in Millions)

2014 Pastureland(Annual Rentalof five acres)

Kleberg County

Titus County

Fannin County

Key Agricultural Industry StatisticsFigure 14

Sources: USDA, Southern Plains Regional Field office, www.nass.usda.gov/tx <http://www.nass.usda.gov/tx> and State Property Tax Board, Texas Almanac, http://texasalmanac.com/topics/government/kleberg-county

Source: Texas Comptroller of Public Accounts

15.0%

10.0%

-8.1% 6.5%

7.4%

3.6%-6.9% 8.9%

9.6%

-5.7% -12.1%

5.5%

12.9%

2013 2014 2015 2016

0.2%

5.0%

-5.0%

-10.0%

-15.0%

0.0%

Kleberg

Titus

Fannin

Annual Percentage Changein Sales Tax Allocation

Figure 16

3500

15001000

25002000

3000

500

496.5 1,970

3,056

2,731

604.5

323.5

815

474

595

0

Kleberg County

Retail Sales($ in Millions)

PropertyValuation

($ in Millions)

County Tax Levy(Per $100,000

Assess Valuation)

Titus County

Fannin County

2015 Retail Sales, Property Valuesand County Taxes

Figure 15

Sources: Texas Comptroller of Public Accounts and Texas State Property Tax Board, reported in TexasAlmanac, http://texasalmanac.com/topics/government/kleberg-county

Perceptions Regarding the Economic ConditionsPerceptions regarding economic conditions are as important as Kleberg County demographics and business conditions. This year’s Economic Forum survey was improved in several ways in order to get a better measure of the perceived importance of current economic circumstances and expectations regarding future economic conditions. First of all, a much larger sample was obtained this year through the assistance of Mr. Jerome Brooks, the author’s graduate assistant. This year’s presentation is based upon the anonymous responses of 267 survey takers, including 60 business managers,150 residents, and 57 students. Secondly, the Economic Forum survey was administered at three different Kingsville locations where respondents had the time and inclination to carefully consider the questions being asked. The author wishes to thank Mr. Nick Harrel, Mr. Joe Henkel, and Mr. Manny Salazar for allowing us to conduct the survey at Harrel’s Pharmacy’s restaurant, Kleberg Bank’s lobby, and the October meeting of the Kingsville Economic Development Council, respectively.

A plurality of respondents in each group believes that the United States’ economic condition is gradually deteriorating, as shown in Figure 18. Forty percent of business managers (represented by the blue line), 37 percent of residents (represented by the red line), and 63 percent (a majority!) of students (represented by the green line) hold this view. The second largest distribution of the sample falls in the “rapidly deteriorating” zone. One factor contributing to this finding is that the survey was taken during September 15 to 30 period, when both presidential candidates and their explanations of what was wrong with America (and how they would improve it) were getting a lot of publicity.

Kleberg County

30%20%10%

-10%-20%

-40%-30%

Democrats(USA: 51.1%)

2.2%

-21.2% 21.5%

28.3%

10.0%

-1.6% -0.6%

-0.2%

-0.3%

-0.3%

-28.1%

-9.7%

Republicans(USA: 47.2%)

Independents(USA: 1.7%)

0%

Titus County

Fannin County

Texas

Political Party Affiliation Relative toUnited States Average: 1988 - 2014

Figure 17

Source: Texas Secretary of State, http://www.sos.state.tx.us/elections/historical/kleberg.shtml

Economic Forum Survey

Source: Survey of 267 individuals conducted at Harrel’s Pharmacy, Kleberg Bank and the Chamber ofCommerce between Sept. 15 and Sept. 30 by Jerome Brooks, the author’s graduate assistant. Respondents included 60 business managers, 150 residents and 57 students.

Source: Ibid

40%

70%

Managers

Managers

RapidlyDeteriorating

RapidlyImproving

GraduallyDeteriorating

GraduallyImprovingStable

Residents

Residents

Students

Students

60%

50%

30%

20%

22% 40%

37%

63%

18% 18%

19%

12%

2%

0%

0%

29%

14%

15%

11%

10%

0%

Survey Respondents’ Perceptions Regarding Health of the U.S. Economy

Figure 18

45%40%35%

25%

15%

15% 27%

23%

23%

2%

1%

0%28%

28% 28%

29%36%

40%

5%10%

10%

9%

0%

20%

30%

Managers

Residents

Students

Managers Residents Students


RapidlyImproving



Survey Respondents’ Perceptions Regarding Health of the Kleberg County Economy

Figure 19

Perceptions Regarding Business Support in the RegionImproved economic conditions are highly dependent on the support businesses receive. Consequently, information was gathered regarding the perceived level of business support in Kleberg County in general, support by local government officials, and support offered by Texas A&M University-Kingsville. As opposed to the prior three illustrations, the figures based on these survey questions, which are Figure 21, Figure 22 and Figure 23, respectively, are positively skewed. For instance, 52 percent of managers believe that Kleberg County is supportive of business endeavors, as shown by the blue line in Figure 21. By comparison, only 17 percent felt that Kleberg County is not supportive. One might be surprised that residents and students are not quite as positive, with only 45 percent and 26 percent of responses being in positive categories, respec-tively. However, it is probably true that managers would not take the risks of starting and managing business enterprises if they felt the community did not support them.

Though still slightly negative, survey respondents have a more positive impression of prospects for the local economy. All three lines in Figure 19 reach their zenith in the “neutral” response category. Combining the two categories on each side, we see that 42 percent of managers expect a decline, while 30 percent anticipate an improved economy over the next year. A more balanced perception among residents is evidenced by the 33 percent below the “neutral” category and 30 percent above it. Forty percent of students, the highest percentage in Figure 19, were unable to forecast any directional change in the local economy.

Consistent with past years, survey respondents generally have positive views of their ability to influence personal economic conditions. As a consequence, only five percent of businessmen (who are represented by the blue line in Figure 20), seven percent of residents, and zero percent of students believe their personal financial health will rapidly deteriorate over the next year. Conversely, 12 percent of businessmen, seven percent of residents and seven percent of students perceive that their economic condition will rapidly improve. Before overstating the positive, however, it is worthwhile to note that a plurality of managers and residents, plus a majority of students, expect to be in about the same economic condition in 12 months.

Managers

Residents

Students


RapidlyImproving



Survey Respondents’ Perceptions Regarding Personal Financial Health

Figure 20

40%

60%

50%

30%

20%

10%

0%

0%

7%

7%

7%

9%

38%

32%

33%

27%44%

51%

5%

15%

12% 12%


Source: Ibid

Students perceive government support of business outlets as being very high, with 44 percent of student responses reported in Figure 22 being in the “supportive” category and 11 percent in the “very supportive” category. Though generally perceiving a positive relationship between government and business, 24 percent of residents believe the local government is nonsupportive of business; hence the red line tracks above the other on the left side of Figure 22. Business managers’ opinions are between these extremes, with about 60 percent more of their responses being positive than negative.

Survey Respondents’ Perceptions RegardingBusiness Support within Kleberg County

Figure 21

Survey Respondents’ Perceptions RegardingBusiness Support by Local Government

Figure 22

40%

60%

50%

5%

51%

50%

5%

30%

20%

10%

10%

12%

13%

23% 21%

2%

9%

32%

36%32%

0%

0%

Managers

Residents

Students

VeryNonsupportive Nonsupportive Supportive Very SupportiveNeutral

VeryNonsupportive

Managers

Residents

Students

Nonsupportive Supportive Very SupportiveNeutral


Source: Ibid

40%45%

35%

25%

15%

5%

50%

30%

20%

10%

7%

9%

5%17%

3%

38%

34%

33%

29%

2%

2%

11%

42%

44%

24%

0%


Source: Ibid

The most positively skewed distribution of opinions is found when survey takers were asked to provide their perceptions regarding business support provided by Texas A&M University-Kingsville. Of course, there may be a bias here given that all survey takers were informed that the survey was conducted under the auspices of the Texas A&M University-Kingsville College of Business Administration. Offsetting this potential bias, survey takers can use the Economic Forum survey to anonymously provide criticism of the university. As shown in the left column of Figure 23, eight percent of managers, five percent of residents, and two percent of students stated that they felt the university was not very supportive of business. Nonetheless, at the other extreme, a much higher 13 percent of managers, 15 percent of residents, and 11 percent of students believe Texas A&M-Kingsville is very supportive. A majority of all groups provide a positive business support rating to Texas A&M University-Kingsville.

Top Economic ConcernsThe top economic concerns are presented in a new manner this year. Instead of a tabular listing, the findings are shown in a graphic form. Survey respondents were given a choice of 10 options. The top economic concern is given a value of 10, the next greatest concern a value of nine, and so forth in Figure 25, where we see unanimous agreement on the top two concerns. Managers (blue bar), residents (red bar) and students (green bar), all rate education as their top priority and health care as their second greatest concern. Each group has the same concerns in the third and fourth spot, with managers being more worried about the unemployment rate, while the availability of quality affordable housing is the third greatest concern for residents and students. The fifth greatest concern of managers is taxation, which rates a lower seventh and sixth spot among residents and students, respectively. This finding is reasonable given that managers are likely to earn more. Residents and students identify personal security (i.e., assault, burglary, and robbery) as their fifth greatest concern. Personal security is the sixth most important concern among managers. Falling out of the list of concerns from last year is terrorism, while inflation continues to be a non-issue among respondents.

Survey Respondents’ Perceptions RegardingBusiness Support by Texas A&M-Kingsville

Figure 23

40%

60%

50%

30%

20%

10%

0%

8%

5%

2%

0%

4%

9%

36%

34%

43%

48%

44%

13%

15%

11%

28%

Managers

Residents

Students

VeryNonsupportive Nonsupportive Supportive Very SupportiveNeutral


Source: Ibid.

Top Five Economic Concerns of Survey Respondents

Figure 24

Source: Ibid.

1210

86420

Education Health Care Unemployment Housing Taxation PersonalSecurity


Figure 25

$120

$100

$80

$60

$40

$20

$25 $24 $20

$23 $23

$13

$13

$18

$7 $9

$8 $8

$3

$6$8

$5

$15

$12

$12 $12

$10

$9

$9

$8

$0

Public Education

Streets


Police

Other

Economic Development

City Beautification

Tax Reduction

Parks & Recreation

Preferred Government Allocation of$100 in Additional RevenueAll identified needs with at least $8 allocation bymanagers, residents or students

Source: Ibid.

Government ExpendituresBeyond a simple rating of concerns, survey takers were also able to propose the funding of a variety of areas using a hypothetical external government grant of $100,000. For ease of reading, Figure 25 presents the respondent allocation per $100 dollars, which can be read as percentage of the amount available. Consistent with their listing of public education as the top economic concern, all groups put at least $20 dollars, which equates to 20 percent of additional funding, towards public education. Managers are willing to put one out of every four dollars (i.e., $25 out of $100) towards improving the public education system. Students allocate a higher $23 to streets, undoubtedly street repair to address the condition of several university area streets.

The other item receiving at least 10 percent of new funding from each group is economic development. In fact, all groups listed economic development as the third most important area for funding. Managers place economic development third with about one out of every eight dollars (i.e., $12 out of $100) going towards stimulating the local economy and improving their business conditions. Perhaps with an eye on trying to get a job, students place a higher $18 dollars (i.e., one out of every $6 dollars) into this account. Managers also directed 10 percent of additional money available to enhanced police protection, perhaps because they have relatively more wealth to protect than residents in general and students.

Survey participants were able to register their desire to improve surroundings using either of two accounts. In aggregate, these uses received about 17 percent of the additional funds, with city beautification outrank-ing the development of parks and recreational facilities among all groups. Compared to other years, despite being short-term residents, this year’s students were willing to allocate $14 to accounts related to surround-ings. The only other account receiving at least $8 of funds from at least one group was tax reduction. Higher incomes, and resultant higher tax payments, are the likely reason for managers to also urge government officials to limit spending. Managers would like about nine percent of funds received to be returned to tax payers instead of spent on identified needs. As evidence that income is the underlying reason to fund a tax cut, students who are likely be on the other end of the income spectrum allocate only three percent of the marginal funds to a tax reduction.

In order of perceived importance, the “other category” includes funding of tourism development, fire protec-tion, solid waste management and code enforcement. An average of $4.63, $3.93, $2.17 and $1.60 out of every $100 was designated for these activities. Survey respondents were also given the chance to identify other potential uses of their tax dollars. Among the highest other prized activities were rural development among managers and historical site preservation among residents. These choices are logical given the higher-income managers being more likely to live outside of Kingsville, while historic site preservation would be more of an issue to residents living in the city. In a throwback to Senator Bernie Sanders’ presidential bid, the most common “other allocation” among students was for expanded use of scholarships to cover college costs.

SummaryWith the presidential election being only one week after the Economic Forum, it is a great time to assess Kleberg County’s economic condition. While unemployment is up, forecast job growth exceeds that of other regions. Titus County and Fannin County were used as benchmarks for Kleberg County this year because they are the two Texas counties with the next larger populations. Additional attention was paid to business conditions in the three counties, in terms of employment, payroll, and establishments in light of Mr. Aaron Farmer as the guest speaker at this year’s Economic Forum and the willingness of all surveyed groups to spend on economic development.

Greater confidence can be placed in the findings of this year’s Economic Forum survey due to the improved survey design, surveying of over twice as many individuals, and conducting of the survey at multiple Kings-ville locations. (Again, a special thanks to Mr. Jerome Brooks, Mr. Nick Harrel, Mr. Joe Henkel, and Mr. Manny Salazar for their assistance.) The survey found that as the focus narrows from the United States, to Kleberg County, to the survey taker, there was an improved perception of where we will be economically in a year. Managers, residents and students have a positive impression of the efforts made to help Kleberg County businesses. While the quality of public education is the greatest concern for all groups, and recipient of most funding, streets repair and economic development were allocated sizeable portions of additional governmental expenditures.

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